County Rejects School's Request To Issue Bonds

Orange County commissioners this week decided not to issue tax-free bonds for an Orlando prep school because they feared the county's credit rating would suffer.

Lake Highland Preparatory School wanted help from the county to float a $1.3 million bond so the school could replace its air conditioning system.

County commissioners voted unanimously Monday not to help the non-profit, private school because of strong objections from their attorney and chief financial officer.

The school wanted the tax-free bonds so it could save almost $200,000 in interest charges. The school can secure its own bonds at a higher interest rate.

Charles Millican, president emeritus of the school, said Tuesday Lake Highland would use regular bonds to pay for the air-conditioning improvements.

Lake Highland has 850 students from kindergarten through high school. Millican said it qualified for tax-free bonds because the school saves Orange County almost $3 million a year in education costs.

However, in a note Friday to commissioners, county Comptroller Martha Haynie said if commissioners issued the bonds it could ''destroy your credit rating and possibly cost the taxpayers millions of dollars on other necessary bond insurances.''

At the meeting Haynie added that the national bond rating services would question Orange County's credit rating.

''We are committing Orange County credit to be paid back with revenues that we have no control over,'' Haynie said.

Attorney Harry Stewart objected to the possible bond issuance because he said the county did not have the legal right to float the bond.

However, the attorney for Lake Highland said the tax-free bond could be issued at no risk to the county. The school would make the bond payments and Florida National Bank had agreed to pay off the bond if the school defaulted.

''We are not asking for a hand-out,'' said Randy Fields, an attorney for Lake Highland. ''No tax money would be used for the bonds.''

General revenue bonds are one of the primary methods that state and local governments use to borrow money. Those who buy the bonds essentially are lending money to the government. The money is repaid with interest when the bond matures.

Bill Donegan was the only the commissioner who supported issuing the bonds. He questioned whether the county would really be at risk if it helped the school. Donegan has a daughter on the waiting list to attend Lake Highland.

Commissioner Vera Carter, who supported the bonds last week, changed her mind because the county financial officials strongly opposed.

Commissioner Linda Chapin strongly opposed the request. Tax-free bonds are not free, she said, because they cost the federal government revenue.